This article analyzes the key shifts in the sourcing strategies of U.S. fashion brands, highlighting the profound and ongoing reconfiguration of global supply chains.

The U.S. Fashion Industry Continues to Face an Uncertain Business Environment

Entering 2026, the U.S. fashion industry is operating in an environment marked by inflation, high interest rates, trade disruptions, and weakening consumer confidence. An April 2026 report by Professor Sheng Lu from the University of Delaware (U.S.) indicates that consumption patterns are becoming increasingly segmented by income level, with middle- and lower-income consumers remaining under considerable financial strain due to the high cost of living and persistently elevated borrowing costs.

U.S. economic indicators suggest that inflationary pressures are regaining momentum. The CPI climbed to 3.8% in April 2026, marking its highest since May 2023 and an increase of 0.5 percentage points from the previous month. Meanwhile, the Federal Reserve maintained its policy rate at 3.5%–3.75% during its early-May 2026 meeting and has not indicated any intention to ease monetary policy in the near term. Despite a 4.9% year-on-year increase in retail sales in April, many fashion companies believe that consumers are becoming more price-conscious and increasingly selective in their purchases of non-essential goods.

Kohl’s reports that its core customers, lower- and middle-income households, are still facing financial pressure and are increasingly focused on value. Macy’s likewise sees rising uncertainty in consumer spending due to macroeconomic conditions, geopolitical tensions, and evolving trade policies. For Carter’s, tariffs continue to weigh heavily on market sentiment and have made the business outlook considerably harder to predict.

Beyond consumer trends, U.S. trade policy remains a major wildcard for the global fashion industry. Businesses anticipate that tariff and trade uncertainties will persist well into the second half of 2026, forcing fashion brands to keep their sourcing strategies flexible and their supply chains increasingly diversified.

Tariffs Continue to Squeeze Corporate Profit Margins

Sheng Lu’s analysis of the financial results of roughly 30 major U.S. fashion companies shows that tariffs remained among the industry’s biggest margin pressures in fiscal 2025. Many companies reported that import tariffs had shaved between 0.2-4.6% off their gross profit margins.

Macy’s estimates that tariff-related impacts will reduce its gross profit margin by approximately 0.2–0.3% in 2026. Meanwhile, GAP stated that changes in global tariff rates during 2025 had a significant adverse effect on profitability, reducing both its gross margin and operating margin by around 1.2% for the full year and by approximately 2% in the fourth quarter of 2025. At the same time, Abercrombie & Fitch reported approximately USD 90 million in tariff-related costs included in its cost of goods sold, resulting in an approximately 2.5% decline in operating margin compared with the previous year.

Some companies have faced significantly greater pressure due to their heavy reliance on sourcing from Asia. Columbia Sportswear reported that unmitigated tariff costs exceeded USD 30 million in 2025, equivalent to an impact of approximately 3–4% over a two-year period.

Meanwhile, PVH Corp. – the parent company of Calvin Klein and Tommy Hilfiger – estimated that its total tariff-related costs could reach approximately USD 195 million in 2026. However, the company stated that it is implementing a range of mitigation measures aimed at offsetting around 60% of the impact this year, with a target of reducing more than 75% of the tariff burden by the end of 2026.

In response to mounting cost pressures, many U.S. fashion companies are pursuing multiple strategies simultaneously, including adjusting prices, optimizing product portfolios, discontinuing underperforming product lines, renegotiating with suppliers, and shifting sourcing to countries with more competitive cost structures. Some companies are also accelerating their full-price selling strategies and limiting promotional activities in an effort to protect profit margins.

However, a key concern is that most companies believe the current trade environment remains highly unpredictable due to the continually evolving U.S. tariff policies. As a result, brands are required to maintain more conservative inventory levels while enhancing the flexibility of their supply chain management and global sourcing strategies.

U.S. Fashion Brands Implement Selective Price Increases

In addition to optimizing sourcing strategies and controlling costs, price increases have become one of the most widely used measures adopted by U.S. fashion brands to offset the impact of tariffs. However, rather than implementing across-the-board price hikes, most companies have opted for a selective pricing strategy, targeting fashion items, new product launches, or premium segments in order to minimize adverse effects on consumer demand.

Columbia Sportswear stated that it had implemented high-single-digit price increases in the U.S. market for its Spring and Fall 2026 collections to offset tariff-related costs. Meanwhile, Levi’s reported that tariffs had reduced its profit margin by approximately 1.5%. However, a significant portion of this impact has been mitigated through price increases, product cost optimization, and a stronger focus on full-price selling. According to the company, consumers have so far shown no significant negative reaction to these pricing adjustments.

The trend toward reducing promotional activities and increasing the share of full-price sales is also being widely adopted by many brands as a means of protecting profit margins. Victoria’s Secret noted that scaling back discount programs had significantly improved its average selling price per item, thereby supporting the profit margins of its PINK brand. Meanwhile, Oxford Industries stated that its 4–8% price increase was driven primarily by product mix enhancement and a higher proportion of newly introduced, higher-value products.

Nevertheless, companies remain cautious in their pricing strategies for basic product categories in order to protect price-sensitive consumers. Urban Outfitters, Inc. (URBN) stated that it continues to prioritize maintaining entry-level prices for its core products and only raises prices for categories where “the product value proposition is strong enough for consumers to accept.”

This trend suggests that the U.S. fashion industry is entering a new phase of competition, in which brand building, product development, and pricing management capabilities are becoming increasingly critical to offset cost pressures and sustain profitability.

The Shift in Global Sourcing Continues to Intensify

Under the combined influence of tariffs, geopolitical developments, and the need to diversify supply chains, U.S. fashion brands are accelerating the reconfiguration of their global sourcing networks in 2026. According to Sheng Lu, four major trends have emerged: a reduction in sourcing dependence on China; increased procurement from cost-competitive Asian markets, particularly Vietnam, Bangladesh, and India; a growing emphasis on nearshoring to Mexico and Central America; and closer attention to newly negotiated trade agreements affecting the textile and apparel sector.

China continues to lose ground in the U.S. apparel import market. According to import market share data, China’s share of U.S. apparel imports fell dramatically from about 22% at the beginning of 2025 to roughly 9% in March 2026. Meanwhile, Vietnam has consolidated its position as one of the leading sourcing destinations for U.S. apparel buyers, maintaining a market share of approximately 21–24% during 2025–2026.

Alongside Vietnam, Bangladesh and India are increasingly reinforcing their positions as low-cost sourcing hubs for the global fashion industry. Export data show that Vietnam’s apparel exports to the United States reached approximately USD 17.9 billion in 2025, up 10.7% from the previous year. Meanwhile, Bangladesh recorded around USD 7.5 billion in apparel exports to the U.S., an increase of 4.7% year-on-year. During the first four months of 2026, Vietnam’s apparel exports to the U.S. continued to grow by 3%, while Bangladesh posted a 2.7% increase over the same period.

Many companies believe that the shift in sourcing away from China has been underway for several years and is likely to continue in the foreseeable future. Oxford Industries reported that the share of sourcing from China had declined from around 40% to approximately 15% by the beginning of fiscal year 2026. Meanwhile, Abercrombie & Fitch currently sources from more than 16 countries worldwide in an effort to enhance supply chain flexibility and resilience.

Beyond Asia, many U.S. fashion brands continue to maintain and expand a portion of their sourcing activities in Mexico and Central America to shorten lead times, enhance market responsiveness, and reduce logistics risks. Although the apparel import shares from countries covered by the United States-Mexico-Canada Agreement (USMCA) and the Central America Free Trade Agreement (CAFTA) have remained relatively stable during 2025–2026, nearshoring continues to be viewed by companies as a strategic option for complementing their global sourcing networks amid rising trade and geopolitical uncertainties.

Geopolitics and Logistics Emerge as Strategic Priorities

In addition to tariffs, geopolitics is increasingly becoming a major factor influencing sourcing and logistics activities across the global fashion industry. Conflicts in the Middle East and disruptions along international shipping routes have prompted many companies to heighten their vigilance regarding supply chain risks in 2026.

Nike reported some transportation disruptions related to the situation in the Middle East during its most recent quarter. Meanwhile, Victoria’s Secret noted that certain shipments to North America had experienced delays due to logistics disruptions, although the impact has not yet been considered severe. At the same time, PVH Corp. believes that geopolitical conflicts and volatility in global trade will remain major sources of uncertainty for business operations in the period ahead.

According to data from the Drewry World Container Index (WCI), global container shipping costs have been trending upward again in recent months. As of May 28, 2026, the WCI Composite Index had risen to approximately USD 2,800 per 40-foot container. Freight rates on shipping routes from Shanghai to Los Angeles and New York City have also increased significantly compared with the beginning of the year, underscoring the persistent logistics pressures facing global supply chains.

Against this backdrop, adaptability is emerging as a top priority for many U.S. fashion companies. Rather than focusing solely on cost optimization, brands are increasingly prioritizing the development of more agile and resilient supply chains through sourcing diversification, expanded nearshoring initiatives, inventory optimization, and enhanced responsiveness to geopolitical and global trade disruptions.

Overall, these trends indicate that the global fashion supply chain is entering a period of profound restructuring, driven by tariffs, geopolitical developments, and increasingly stringent risk management requirements. For Vietnam, this presents a significant opportunity to strengthen its attractiveness as a sourcing destination and expand its market share amid the ongoing supply diversification strategies of international brands. However, to capitalize on the shifting order landscape, Vietnamese textile and apparel companies must become more proactive in managing their supply chains, while enhancing their ability to deliver orders more quickly, reliably, and flexibly in response to the evolving dynamics of the global market.

From Market volatility to Workforce pressures

Recent market developments have demonstrated that the global textile and garment supply chain no longer operates under its traditional model. Orders are shifting more rapidly, lead times are becoming shrinking, and requirements relating to quality, social responsibility, traceability, and data transparency are growing increasingly stringent. In this environment, buyers are no longer seeking only low-cost suppliers; they increasingly prioritize companies that can respond quickly, maintain stable production, and adapt effectively to market fluctuations.

As a result, workforce quality has become a core element of competitive advantage. If the industry’s priority in the past was simply to secure enough workers to keep production lines running, the challenge today is to build and retain a skilled, adaptable, and future-ready workforce. Internal capabilities, the ability to maintain flexible production rhythms, and the quality of human capital are increasingly becoming the key determinants of resilience and competitive advantage for textile and garment enterprises in this new environment.

Retaining Core employees means Preserving production capacity

Amid ongoing market volatility, workforce stability has become a critical factor in the production efficiency of textile and garment enterprises. Employee turnover not only disrupts production lines but also increases recruitment and training costs, while raising quality-related risks.

Following the Lunar New Year holiday 2026, the return-to-work rate at Vinatex’s member companies reached 98–100%, reflecting the effectiveness of the Group’s employee welfare, engagement, and job security policies. By maintaining a stable workforce, many enterprises were able to quickly resume production and sustain operational momentum from the very beginning of the year.

In practice, companies that invest in employee well-being and build trust within the organization tend to be better positioned to maintain stable operations, enhance resilience, and strengthen their competitive capabilities in an increasingly uncertain market environment.

From Filling positions to Building the right skills

As global supply chains continue to change, new demands are being placed on the textile and garment workforce. Workers can no longer rely solely on proficiency in a single, fixed role; they must be capable of quickly adapting to new products, processes, machinery, and quality requirements. The industry’s workforce challenge has therefore shifted from securing sufficient manpower to building a workforce equipped with the right skills.

To respond to these new demands, frontline employees must receive practical, production-oriented training, while technical and management staff need to improve their coordination, problem-solving, and interdepartmental collaboration skills. For 2026, Vinatex has outlined several key initiatives, including completing its organizational model, standardizing competency frameworks, preparing workforce plans based on production needs, strengthening training in productivity, quality, foreign languages, and customer skills, and building a KPI system tied to productivity and income.

The issue is not training more but training smarter – developing the exact skills that enterprises need to remain competitive in the new era of the textile and garment industry.

Middle Management as the Foundation of Performance

Middle-management personnel – including team leaders, line supervisors, workshop managers, and shift supervisors – have become a critical link in the textile and garment industry’s workforce equation, as they are directly responsible for managing production and maintaining the closest day-to-day engagement with employees. In an environment where orders change rapidly, product designs are becoming increasingly complex, and profit margins are narrowing, companies will struggle to convert resources and orders into actual productivity if this group lacks the necessary capabilities.

For this reason, Vinatex believes that improving performance must begin with people, organizational structures, and execution discipline. In this process, strengthening the capabilities of middle managers is a key priority for sustaining operational efficiency and meeting the market’s increasingly demanding requirements.

As global supply chains continue to be reconfigured, the workforce challenge must be viewed through the lens of competitiveness. Retaining core workers is about safeguarding production continuity. Building new skills is about staying agile in the face of changing products and market expectations. Developing capable middle managers is about maintaining operational discipline and efficiency. These priorities have moved far beyond the responsibility of the HR department; they have become decisive factors in a company’s ability to win orders, keep customers, and sustain its position in an ever-changing global supply chain.

By 2026, the “local brand” advantage is no longer sufficient to sustain the competitiveness of Vietnamese fashion labels. Consumers no longer make purchasing decisions simply because a brand is domestic; instead, they place greater emphasis on product quality, design, shopping experience, delivery speed, and customer service. As a result, brand identity must be accompanied by strong operational capabilities, agile supply chains, and effective customer data management.

The traditional store expansion model has also revealed significant limitations, including rising rental, labor, and inventory costs continue to rise while consumers increasingly shift toward online shopping. Consequently, fashion brands need to restructure toward a leaner, omnichannel retail model that places customer data at the center of decision-making.

In addition, intensifying competition from international brands is forcing Vietnamese fashion companies to seek differentiated advantages rather than competing head-on in terms of scale and price. Competitive strengths such as a deep understanding of Vietnamese culture, climate, fit preferences, and consumer preferences need to be leveraged more effectively and strategically.

More importantly, today’s challenge extends beyond weakening consumer demand; it lies in management capability. The brands that succeed are those that can effectively manage customer data, operate lean business models, and invest in communities and digital content. The withdrawal of several brands in early 2026 is widely viewed as a natural market correction, highlighting the need for businesses to shift from a product-selling mindset to one focused on building long-term customer relationships, optimizing supply chains, investing in brand value, and professionalizing management practices through long-term strategic thinking.

Interviewer: In the context of the textile and garment industry facing increasingly pressing demands for digital transformation and green transition, how do you assess the role of the media in supporting enterprises as they adapt to these trends?

Mr. Le Trong Minh: I believe that the media is not merely a communication channel for promoting products; it also serves as a catalyst that amplifies the values enterprises strive to create. Through media coverage, efforts related to digital transformation, green transition, corporate social responsibility, and corporate culture can gain broader recognition and stronger public trust than through self-promotional communications.

More importantly, the media also plays the role of a constructive watchdog. Objective perspectives from the press help businesses identify shortcomings, improve governance practices, and strengthen operational performance. At the same time, timely reporting on non-transparent business practices contributes to fostering a healthier business environment.

In the context of the global shift toward green growth and sustainable development, I believe the relationship between the media and businesses should be regarded as a strategic partnership rather than merely a channel for publicity. The media helps enterprises communicate meaningful stories and long-term values to society, while businesses contribute practical experiences, emerging trends, and industry expertise that enhance the quality and relevance of media coverage.

In today’s environment, where information spreads rapidly, businesses must also take a more proactive approach to communications. Whenever issues arise or explanations are needed, timely, accurate, and transparent disclosure is critical. Silence or delayed responses can create an information vacuum, allowing unverified narratives to influence public perception and potentially damage trust in the business.

To maximize the effectiveness of green transformation and sustainable development initiatives, businesses need to partner with reputable media organizations that possess a strong understanding of their industries and can effectively reach the intended audience. When communication is delivered through trusted channels and reaches the right audience, the influence and resonance of new strategies, commitments, and development goals are greatly amplified.

In my view, the partnership between the media and businesses delivers its greatest value when it is grounded in transparency, responsibility, and a shared vision for sustainable growth. Under these conditions, the media not only reports on corporate activities but also helps communicate the broader economic and social value that businesses generate through their development efforts.

In your view, how should the media adapt its approach and communication methods so that it not only reports on sustainability initiatives but also encourages textile and garment enterprises to pursue sustainable development in a more substantive manner? How can green transformation be presented as a compelling and engaging topic that resonates with the public while helping audiences gain a comprehensive and accurate understanding of this trend?

Green transformation is no longer optional, it has become a prerequisite for textile and garment enterprises that wish to remain competitive and continue accessing global export markets. However, one of the greatest challenges is that concepts related to sustainable development are often highly technical and difficult for the public to fully understand.

I believe the media should act as a “bridge” between technical expertise and public understanding. Complex concepts related to sustainability need to be translated into practical, relatable stories that resonate with people’s daily lives. Instead of focusing exclusively on emissions targets or circular economy indicators, the conversation should highlight how green transformation influences jobs, incomes, business resilience, and long-term economic development. To achieve this, communication efforts should place greater emphasis on storytelling and adopt a people-centered approach. Through relatable examples, visual illustrations, and real-world experiences, the media can help audiences connect with the purpose and value of the green transition. When the public understands and supports these initiatives, sustainable development goals can be implemented far more effectively.

Instead of focusing solely on a new production line or a major capital investment, we should tell the stories of workers who benefit from safer and better working conditions, and businesses that are able to conserve resources, reduce costs, and secure orders through their green transition efforts. When audiences can see the tangible benefits and practical value of these initiatives, they are far more likely to relate to them and embrace the message.

The media should also take a comprehensive view of the global sustainability standards, which is undoubtedly becoming an essential part of international trade and development, there are instances where environmental requirements may function as technical trade barriers or protection tools. This issue should be reported objective to help businesses make more informed decisions and support state management agency in formulating appropriate policies.

To make communication on green transformation more effective, businesses must also take a proactive role in partnering with the media, through providing background information, sharing transparent data, and facilitating factory visits and press trips with clearly defined objectives. Companies should also engage journalists who possess relevant expertise and a strong understanding of both the business and the industry. When the media has a clear understanding of the underlying issues, stories about sustainability and green transformation become more vivid and compelling, enabling them to generate a stronger impact and broader resonance across society.

Many textile and garment enterprises are currently under pressure to invest in both green transformation and digital transformation while facing limited financial resources. In your view, what approach should companies take to ensure that these transformation efforts meet market requirements while also delivering effective returns on investment? At the same time, what role can the media play in helping businesses strengthen their credibility and transparency in the eyes of investors and financial institutions, thereby improving access to green financing and other sustainable development funding solutions?

In my view, businesses should view green and digital transformation as a business imperative. They are no longer merely matters of environmental responsibility or sustainable development; they have become essential requirements for maintaining competitiveness, securing orders, and deepening participation in global supply chains. As export markets continue to tighten requirements related to environmental performance, emissions, and sustainable governance, companies that are slow to adapt risk losing their competitive edge and, potentially, access to customers altogether. For this reason, investing in green transformation is necessary, but does not require large-scale investments from the outset. In practice, many international brands have already brought criteria such as carbon emissions, renewable energy usage, supply chain traceability, and social responsibility into their supplier selection processes. As a result, green transformation is evolving from a compliance requirement into a new source of competitive advantage for textile and garment enterprises.

What is important is that businesses should develop a transformation roadmap that aligns with their scale, capabilities, and available resources. Priority should be given to initiatives that deliver clear and measurable benefits, such as energy-efficiency improvements, operational optimization, the digitalization of management processes, or solutions that directly address customer requirements. Early wins provide both proof of concept and additional capacity, allowing companies to pursue the next stages of transformation more effectively.

In addition, compliance with green standards is increasingly becoming an important factor in accessing capital. Today, many investors and financial institutions evaluate not only a company’s business performance but also its commitments to ESG (Environmental, Social, and Governance) principles before deciding whether to invest, establish partnerships, or extend credit.

In this process, the media plays a crucial role as a bridge connecting businesses, financial institutions, and regulatory authorities. Through forums, thematic seminars, and networking initiatives, the media helps bring these stakeholders closer together, enabling businesses to gain access to information on green finance, financial support programs, and emerging requirements from international markets. At the same time, the media contributes to strengthening corporate transparency and credibility by providing objective coverage of companies’ efforts in green transformation and sustainable development. Such visibility serves as an important basis for investors, banks, and business partners when assessing a company’s governance capabilities.

I believe that the role of the media today extends far beyond simply reporting the news. It has become a platform for connecting knowledge, resources, and opportunities for collaboration. When businesses, media organizations, and financial institutions work together, the textile and garment industry’s green transformation journey can be advanced in a more effective, practical, and meaningful manner.

Thank you very much for sharing your insights!

Vinatex’s Capital Representatives: From Capital Preservation to Strategic Development

Mr. CEO, could you share with us the key drivers behind the Group’s decision to fundamentally reform the evaluation framework for Capital Representatives over the past year?

Over the years, Vinatex has regularly evaluated its Capital Representatives at member enterprises to acknowledge their significant contributions to the Group’s annual performance. At the same time, these assessments help identify issues that require improvement at an early stage, allowing the Group to recommend corrective measures and support Capital Representatives in carrying out their responsibilities more effectively. This, in turn, enhances their role in driving business development, as well as in preserving and increasing the value of the entrusted capital.

In 2025, this process was comprehensively redesigned. The most significant impetus for the reform came from the growing demand for greater transparency, objectivity, and precision in performance evaluations, coupled with the need to create new growth drivers for the Group as it enters a new phase of development.

Against the backdrop of an increasingly volatile textile and apparel industry and rising pressure to double-digit growth. Improving total factor productivity (TFP), strengthening supply chain linkages, fostering innovation, accelerating digital transformation, building high-quality human resources, and meeting ESG standards have become essential pillars of competitiveness and sustainable development. As a result, our evaluation system also needed to change so that it could adequately reflect these priorities.

Based on these requirements, Vinatex has developed a new evaluation framework that goes beyond measuring final financial outcomes to also assess management capabilities, adaptability to market fluctuations, and the contribution of Capital Representatives to the long-term development objectives of both their enterprises and the Group.

What is the most significant “breakthrough” in Vinatex’s 2025 evaluation criteria for Capital Representatives compared with previous years?

Although this year’s evaluation framework continues to be built around five key pillars: Finance, Market, Human Resources, Investment and Development, and Digital Transformation — the most significant breakthrough lies in the greater emphasis on quantitative assessment and a shift in approach from merely evaluating end results to assessing the quality of governance and the capability to deliver sustainable performance.

Previously, the assessment process focused primarily on indicators related to production and business performance. This year, the Group has added a range of new criteria that more comprehensively reflect management quality and the company’s ability to compete and grow sustainably over the long term.

Specifically, within the financial dimension, for the first time, Vinatex has introduced indicators such as the Cash Conversion Cycle (CCC) and Total Factor Productivity (TFP) to assess cash flow management, growth quality, resource efficiency, and long-term competitiveness. In the market dimension, the evaluation framework goes beyond revenue generation and considers market diversification, customer portfolio quality, and the sustainability of the company’s market structure. In terms of investment and digital transformation, the new criteria are designed to encourage enterprises to increase technology investments, the application of advanced management practices, and enhanced competitiveness. At the same time, the human capital indicators have been further strengthened to support the development of a high-quality workforce.

Another notable enhancement is that the indicators have been designed with adjustment coefficients tailored to the specific characteristics of each business segment — such as spinning, weaving, and garment manufacturing — to ensure fairness and enhance comparability across different business units.

Aligning the Group’s strategic objectives with actual performance at member companies has always been a challenging task. This year, what principles did Vinatex apply in designing the KPI framework for Capital Representatives to ensure that they move beyond merely “preserving capital” and take a more proactive role in “driving strategic development”?

To provide a comprehensive assessment, the KPI framework for Capital Representatives has been structured around a dual objective: measuring current performance while also evaluating the enterprise’s capacity to create sustainable growth and long-term value.

We believe that current business performance remains the most important indicator of a Capital Representative’s management and leadership effectiveness and should be recognized properly. Therefore, performance indicators reflecting current results — such as Return on Equity (ROE), dividend payout ratio, and the actual value of dividends submitted to Vinatex — continue to carry significant weight in the evaluation framework. These metrics directly reflect capital efficiency, profitability, and the enterprise’s tangible contribution to the Group’s overall financial strength.

However, relying solely on short-term results makes it difficult to create motivation for companies to invest in the future. Therefore, in addition to indicators that measure current performance, this year’s KPI framework introduces new metrics to assess governance quality, financial health, and the enterprise’s long-term development capabilities.

More importantly, we have established a direct linkage between the Group’s strategic objectives and the evaluation framework for Capital Representatives. Key strategic priorities such as market development, customer quality enhancement, digital transformation, technological innovation, human capital development, and ESG implementation — have all been translated into specific performance indicators.

The new KPI framework, therefore, is not merely a tool for evaluating annual performance, it also acts as a mechanism for transmitting the Group’s strategic priorities to every member enterprise, ensuring that Capital Representatives clearly understand their responsibility to deliver near-term results while simultaneously advancing the Group’s long-term development directions.

Building a Proactive, Transparent, and Effective Governance Culture

Considering that, enterprises are influenced by numerous external factors, particularly market conditions. How does the Group’s 2025 evaluation framework distinguish the actual capabilities of Capital Representatives from the impact of these external factors?

In developing the 2025 evaluation framework, one of the most important principles was to select indicators that accurately reflect the managerial capabilities of Capital Representatives while minimizing the influence of external factors such as market fluctuations, capital size, and industry-specific characteristics.

For example, within the financial pillar, rather than relying solely on absolute profit figures, the Group uses Return on Equity (ROE) as a key metric to measure capital efficiency. This approach provides a clearer assessment of management effectiveness and the ability to create value from the capital entrusted to the enterprise.

Similarly, in assessing operational performance, the Group has incorporated Total Factor Productivity (TFP) into the evaluation framework instead of relying solely on revenue or output growth rates. TFP measures the efficiency with which key resources, such as labor and capital, are utilized, thereby providing a more accurate assessment of the quality of a company’s growth.

In the market dimension, the evaluation framework also goes beyond revenue size and  dives into indicators that reflect the quality of market development, including the share of revenue generated from key markets, customer mix, and the proportion of strategic customers. These metrics help assess an enterprise’s adaptability, its ability to sustain competitiveness, and its capacity to mitigate risks in a volatile market environment.

In addition, many of the indicators have been tailored to the specific characteristics of different business segments and incorporate adjustment factors or sector-specific indices for the Spinning and Garment industries, thereby ensuring comparability and fairness across the Group.

In essence, this year’s framework goes beyond evaluating outcomes alone; it focuses on assessing the quality of governance and the managerial capabilities that drive those outcomes.

What changes does the Group expect the new KPI framework to bring to the governance culture of its member enterprises after a period of implementation?

Our greatest expectation is to gradually foster a culture of proactive, transparent, and performance-oriented governance across our member enterprises.

More importantly, strategic development objectives must be clearly understood and embraced by Capital Representatives. In doing so, they will not only focus on achieving immediate business targets but also take a proactive role in building long-term growth drivers, including market development, digital transformation, human capital enhancement, and sustainable development.

Through the new KPI framework, the Group also aims to encourage member enterprises to transition from experience-based management to data-driven management, supported by clear and measurable performance indicators. As a result, strategic objectives can be translated into concrete actions, responsibilities can be assigned more clearly, and the overall quality of corporate management and decision-making can be progressively enhanced.

What should be the next step to ensure that the governance and evaluation of Capital Representatives truly become a strategic management tool for the Group?

In the coming period, the Group will continue to refine the governance framework for Capital Representatives at its member enterprises in a more modern, transparent manner and with closer alignment to the Group’s overall management and operational processes. Long-term development criteria will be established early and maintained consistently, enabling Capital Representatives to align with the Group’s strategic objectives and proactively incorporate them into their day-to-day management and long-term decision-making processes. At the same time, a set of supplementary indicators will be designed to reflect the specific characteristics of each year’s market conditions. In addition, the Group will introduce adjustment factors that consider the degree of managerial complexity faced by larger-scale enterprises.

A key priority will be to accelerate digital transformation and build a centralized management data system. By ensuring that production, business, financial, and governance data are continuously updated, the Group will be able to monitor the performance of Capital Representatives against their objectives in real time. This will enable timely support, early warnings, and necessary adjustments, rather than relying solely on year-end evaluations.

In addition, we want the evaluation results to go beyond the classification, recognition, and appointments. They should become a tool for driving continuous improvement. Issues identified through the evaluation process will be translated into governance recommendations and concrete action plans tailored to each enterprise, with effective support and close collaboration from the Group’s functional departments.

Thank you for the interview!

In the United States, the United States Department of Agriculture (USDA) has launched the “Great American Cotton Plan” to promote domestic cotton consumption, support cotton growers, and revitalize the country’s textile supply chain. The program encourages the use of natural fibers, expands credit support, modernizes the textile industry, and prioritizes the use of U.S. cotton throughout supply chains. This trend could increase demand for U.S. cotton, potentially affecting raw material competition and international cotton prices.

In India, the government has exempted all cotton import duties from June 1 to October 31, 2026, in an effort to ease supply shortages and lower domestic cotton prices. This policy is expected to significantly reduce raw material costs for Indian spinning mills, thereby enhancing their competitiveness relative to Vietnamese yarn exporter in major markets such as China, Bangladesh, and Turkey.

Meanwhile, China has extended its target price support policy for Xinjiang cotton at CNY 18,600 per ton through 2028 and continues to accelerate the development of its domestic spinning industry. This policy is expected to help sustain cotton supply and expand China’s yarn production capacity, thereby maintaining competitive pressure on Vietnam’s spinning sector.

Against this backdrop, Vietnamese textile and yarn producers need to closely monitor global cotton policy developments and price movements, capitalize on favorable opportunities to lock in raw material purchases, and keep track of yarn price trends in India in order to formulate appropriate pricing strategies and safeguard their export competitiveness.

Latest Regulations on Administrative penalties in the Customs sector

On May 15, 2026, the Government issued Decree No. 169/2026/ND-CP on administrative penalties in the customs sector. The Decree will take effect on July 1, 2026, and introduces several significant changes compared with Decree No. 128/2020/ND-CP.

The new Decree introduces a definition of  object and instrumentalities involved in administrative violations, extends the statute of limitations for imposing administrative penalties by an additional year for cases referred by judicial authorities, and adds 6 circumstances in which enterprises will not be subject to penalties when they make supplementary declarations and fulfill their tax obligations in accordance with the guidance of competent authorities.

In addition, the Decree introduces several new categories of customs-related violations and establishes provisions for handling administrative violations in the electronic environment to support digital transformation. It also removes a number of provisions under Decree No. 128 that are no longer considered appropriate. Enterprises should promptly update and familiarize themselves with these changes to ensure compliance with customs regulations from July 1, 2026 onward.

Government accelerates decentralization, reduction and simplification of Administrative procedures and Business requirements

On May 18, 2026, the Government issued Resolution No. 66.18/NQ-CP on decentralization and the reduction and simplification of administrative procedures and business conditions, effective from July 1, 2026. Under the Resolution, several procedures relating to fire prevention and firefighting (FPF) have been abolished, including acceptance inspection and commissioning procedures for projects that have already undergone FPF design appraisal. In addition, documentation requirements for FPF design appraisal have been simplified.

In the area of occupational safety and health (OSH), the procedures for reviewing and assessing the operating conditions of enterprises conducting self-training in occupational safety and health have been abolished.

In the accounting sector, regulations governing the conditions, examinations, issuance, and revocation of accountant certificates will no longer be applied. Individuals who obtained certificates before March 1, 2027, will remain eligible to sit for the auditor examination.

For the construction sector, the processing time for construction permit applications has been reduced to 10 working days, while applications for amendments to construction permits will be processed within 9 working days, provided that the files are complete and valid.

Detailed guidelines for the implementation of regulations on Electronic Employment Contracts

On May 15, 2026, the Ministry of Home Affairs of Vietnam issued Circular No. 08/2026/TT-BNV providing guidance on the implementation of electronic employment contracts (e-contracts) in accordance with Decree No. 337/2025/ND-CP. Effective from July 1, 2026, e-contracts are encouraged as a replacement for paper-based contracts in order to enhance human resource management efficiency and simplify administrative procedures.

Under the new regulations, both employees and employers are required to register accounts on the e-contract platform through the national electronic identification system (VNeID). Each e-contract will be assigned a unique identification number (ID). The platform will also be used to report workforce changes and facilitate the transition from paper-based contracts to electronic contracts. All electronic employment contracts and their appendices will be stored on the system for a period of 10 years from the date of contract termination.

Sharp increase in sea freight rates requires Textile and Garment firms to re-examine logistics costs

International ocean freight rates are rising sharply as the peak shipping season has arrived earlier than expected, with rates for 40-foot containers increasing by 23% to USD 3,433 per container. Freight rates on the routes from Shanghai to Los Angeles and New York have risen by 31% and 20%, reflecting a strong recovery in global shipping demand.

The increase has been driven primarily by companies accelerating shipments ahead of potential U.S. tariff adjustments scheduled for July 2026, rising import demand related to the 2026 FIFA World Cup, and geopolitical risks in the Middle East that have forced many shipping lines to reroute around Africa. Freight rates are expected to remain elevated at least through the end of July 2026.

Under these circumstances, textile and garment enterprises need to review and update logistics costs within their cost structures, proactively plan delivery schedules, secure shipping space early, and fully account for freight rate volatility to avoid unexpected expenses and protect the profitability of their orders.

A Turning Point in the Supply Chain

According to Haluk Demirtel, Vice President of Operations at Li & Fung, Vietnam’s Textile and Garment industry is experiencing a fundamental structural shift – from a pure contract manufacturing model to an FOB model characterized by greater autonomy and higher value creation. This transformation represents a critical turning point in strengthening Vietnam’s role and upgrading its position in global supply chains.

This transformation has been clearly reflected in trade performance. In 2024, Vietnam surpassed China for the first time to become the largest exporter of textiles and garments to the U.S. market during the first 5 months of the year. Free trade agreements, together with global sourcing trends favoring flexible manufacturing and smaller order volumes, are creating new opportunities for domestic designers and manufacturers.

However, Vietnam’s Textile and Garment industry continues to face significant challenges, particularly its heavy dependence on imported raw materials, which account for approximately 70% of total demand, as well as mounting pressures to achieve sustainable development and enhance competitiveness within global supply chains.

Making Sustainability a Daily Practice

According to Nguyen Lien Chi, Content Director of ELLE Vietnam, Vietnam’s fashion industry continues to face a gap between its manufacturing capabilities for international brands and the development of its domestic fashion labels. Although Vietnam has emerged as a major manufacturing hub, many local brands still rely on low-cost imported materials and have yet to fully understand the principles and processes of responsible production.

She believes that the media should play a critical role in raising awareness and driving behavioral change by “localizing” the concept of sustainability, making its values more accessible, practical, and applicable to everyday business practices. At the same time, Vietnam’s fashion industry needs to establish stronger platforms for  networking, communication, and collaboration among designers, suppliers, and industry experts in order to foster sustainable development.

Slow Fashion and the Redefinition of Value

Fashion designer Vu Thao, founder of Kilomet109, said that the brand has built a network of direct partnerships with artisan communities and ethnic minority groups across Vietnam, utilizing natural fibers and dyes while preserving traditional weaving techniques. According to her, fashion is not merely a product; it also plays a role in safeguarding cultural heritage and improving the livelihoods of local communities.

However, many traditional weaving crafts are facing the risk of disappearing, with only a handful of families in some areas continuing to practice these traditions. At the same time, the understanding of value in fashion is evolving – from a focus on chasing trends to one that places greater emphasis on identity, sustainability, and more meaningful values.

She emphasized that tradition should not be romanticized, as the communities themselves also aspire to innovate and modernize their traditional products. In her view, building sustainable fashion is a long-term journey that requires time, trust, and sustained commitment, because there are “no shortcuts” to  building a truly sustainable fahsion industry.

The United Arab Emirates’ (UAE) announcement that it will withdraw from OPEC, OPEC+, and OAPEC effective May 1, 2026 is adding further pressure to the global energy market, following a period of intense volatility caused by tensions in the Middle East. As a country accounting for approximately 12% of OPEC’s output and possessing substantial spare production capacity, the UAE is widely viewed as capable of increasing oil production in the coming period to expand its export market share. This development could contribute to a loosening of global oil supply, thereby gradually placing downward pressure on world oil prices over the medium and long term.

For the textile and garment industry, declining oil prices could lead to lower prices for synthetic fibers such as polyester and nylon, since their input materials are closely tied to the petrochemical market. Global cotton prices are also expected to face downward adjustment pressure as competition from synthetic fibers intensifies and speculative sentiment in commodity markets weakens. Under current conditions, textile and garment enterprises need to closely monitor developments in oil prices and raw material markets in order to formulate appropriate cotton and fiber procurement strategies, while avoiding aggressive purchasing when raw material prices remain elevated.

China Reduces Cotton Planting Area

China’s policy to reduce cotton planting areas from approximately 43 million mu (around 7 million acres) of farmland in 2025 to 36 million mu over the next three years, including a reduction to around 38 million mu as early as 2026. This is a highly significant signal for the global cotton market and textile supply chain. This is not merely an agricultural policy adjustment, but rather a strategic restructuring move aimed at transforming the cotton sector toward “lower volume, higher quality,” while controlling domestic oversupply and improving production efficiency.

The reduction in cotton acreage, while still maintaining stable output targets through productivity improvements, is likely to make China’s domestic cotton supply tighter in the short and medium term. Since the beginning of 2026, domestic cotton prices in China have already remained above international price levels and are likely to continue this trend as markets anticipate a decline in domestic supply.

For the global textile and garment industry, the most significant impact will be the shift in the cotton supply–demand balance. As China’s domestic cotton supply declines, the country may need to increase imports of high-quality cotton from the United States, Brazil, Australia, and West Africa to offset shortages. This is expected to support global cotton prices over the medium term. At the same time, the price gap between cotton and polyester fiber could widen if oil prices decline while domestic cotton prices in China remain elevated.

Recommendations for yarn manufacturers:

• Closely monitor China’s cotton crop conditions and cotton subsidy policies;
• Proactively divide cotton purchasing plans into multiple stages instead of concentrating purchases at one time;
• Regularly track the A Index, ICE cotton prices, and the price gap between China’s domestic cotton market and international prices in order to respond promptly to market fluctuations;
• Accelerate the development of blended yarns, recycled yarns, and higher value-added yarn products to reduce complete dependence on cotton.

LUWA Carbon Fiber Fans – Reduce HVAC System Energy Consumption by Approximately 18%

In the current environment, researching electricity cost-saving solutions for spinning and textile mills has become increasingly necessary. LUWA has introduced a solution that replaces the aluminum fan blade model B607-D1600-18° with the Carbon Fiber blade model B807-D1600-8° in HVAC systems for spinning mills.

Actual Measurement Results:

Key Breakthrough: The Carbon Fiber blades are 60% lighter than aluminum blades, helping reduce motor load and improve aerodynamic efficiency.

This fan blade replacement solution reduces electricity consumption by approximately 18% without requiring any system modifications, thereby delivering significant energy savings while enhancing the efficiency of the enterprise’s HVAC systems.

Nearshoring Expansion and the Transparency Gap Beneath It

The garment industry is increasingly shifting toward nearshoring, but the primary reason is not geographic distance, it’s the lack of transparency in supply chain data. When “blind spots” exist between production and delivery, packaging errors, inaccurate inventory records, and rising transportation costs can quickly turn minor mistakes into significant losses.

The solution does not lie in relocating production, but investing in technology such as RFID. SML Group’s FCS platform enables real-time visibility and verification of supply chain data, improving delivery accuracy to 95%, reducing delays by 40%, and shortening processing time by 30%. In this new environment, competitive advantage is no longer defined solely by manufacturing excellence, but also by the ability to provide reliable data.

Implications & Recommendations:

• For export-oriented enterprises, prioritizing data transparency and implementing real-time tracking systems is becoming increasingly essential.
• Minimize pre-shipment errors and strengthen the ability to meet the increasingly stringent requirements of international customers.

Enterprises are advised to integrate safety standards throughout their entire governance systems, link safety indicators to management KPIs, while broadening the concept of workplace safety to include mental health, harassment-free environments, non-discrimination, and the prohibition of forced labor. Transparency in safety data and reporting is also considered an essential requirement for fulfilling social responsibility commitments and building trust with international partners.

Digital technologies such as IoT, AI, and automation are creating major opportunities for textile and garment enterprises to transform their approach to occupational safety management. These technologies enable real-time monitoring of working environments, prediction of accident risks, reduced reliance on manual labor in hazardous operations, and the development of a data-driven safety culture.

In addition, workplace anti-harassment requirements are regarded as an important step toward building a fair, inclusive, and safe working environment — both physically and mentally, especially in the textile and garment industry, where female workers make up a large proportion of the workforce.

To encourage workers to actively participate in ensuring workplace safety rather than merely complying with regulations, enterprises need to strengthen practical training programs, establish mechanism to recognize employee initiatives, create safe feedback channels, and enhance the role of middle management. The goal is to build a sustainable safety culture in which employees proactively protect themselves and their colleagues during their work.

The designs in the collection are built upon a balance between structure and movement — between the permanence of stone and the fluidity of waves. Lightweight fabrics with natural drape create graceful motion with every step, as if carrying the breath of the sea. The silhouettes are refined and understated, offering just enough space for the body to move freely and for emotions to unfold naturally and effortlessly.

More than drawing inspiration from the timeless beauty of the ocean, the collection presents a fashion journey shaped through visual storytelling. Each design captures a distinctive beauty of nature — from gentle waves caressing rocky shores to the glow of sunset reflected across the sea. Every line, texture, and color carries its own narrative.

A defining feature of “WAVES” lies in its emotionally rich color palette: the warm beige of sand, the deep brown of stone, the deep blue of the sea, and the glowing red hues of sunset. Together, these tones blend seamlessly to create a visual landscape that evokes an endless afternoon by the shore — a place where time slows down and emotions deepen. Rather than focusing on excessive embellishment, the collection embraces modern, youthful colors that align with the key color trends of 2026. With “WAVES”, women are invited to embrace soft silhouettes crafted from premium fabrics — a celebration of femininity, self-expression, and the simple pleasure of being cherished.

Unpretentious and free from excessive ornamentation, the “WAVES” collection connects with its wearers through subtlety and authentic emotion. Nature-inspired patterns are no longer sharply defined; instead, they are softened, stretched, and gently blended — much like nature itself is constantly evolving, and much like the modern woman, who embodies both strength and grace.

With “WAVES”, HeraDG offers more than fashion; it conveys a way of life. It is an invitation to embrace a summer in which there is no need to strive to be different — only to be yourself, with freedom, confidence, and quiet sophistication.